New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Port of Tauranga<br>FY20 Preview&nbsp;— Keeping an Even Keel</h2>
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<p><strong>UNDERPERFORM</strong></p>
<p>We expect Port of Tauranga (POT) to release a subdued FY20 result when it reports on 28 August 2020, reflective of lower log export volumes and a slowdown in container growth. COVID-19 had an initial impact on POT by means of lower log export volumes, but the 'essential' nature of many of its trades has, and continues to, provide a reasonable level of immunity. We believe&nbsp;the bigger COVID-19 related issue for POT will be the resultant impact on the broader economic backdrop, which may influence cargo&nbsp;flows over the near to medium term.&nbsp;</p>
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<h3>Key things to look out for in&nbsp;POT's&nbsp;FY20 result:</h3>
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<li><strong>Container growth softens</strong>: We estimate that POT's container volume was down -2% on FY19. Container volumes were up +4% in 1H20, however, we expect there has been a softening of volumes through the fourth quarter, leading to an overall volume decline.&nbsp;</li>
<li><strong>Reduced log exports</strong>: NZ Stats data suggests that&nbsp;POT's&nbsp;log exports were down -22% in FY20, as a result of; (1) weak log&nbsp;prices through the start of the financial year, (2) Chinese demand decline in February 2020 as ports closed, and (3) forestry being deemed 'non-essential' during Alert Level 4.&nbsp;</li>
<li><strong>Bulk trades</strong>: Lower oil products as a result of COVID-19 will weigh on 2H20 bulk products and exacerbate the weakness in both fertilizer and grain/dairy feed imports in 1H20.&nbsp;</li>
<li><strong>Associates</strong>: We expect a meaningful increase in&nbsp;associate&nbsp;income, despite a subdued period for&nbsp;Northport&nbsp;(Stats NZ data shows log export volumes down -10%). Coda's recovery is a key driver as it cycles losses in 2H19.&nbsp;</li>
<li><strong>Upper North Island Supply Chain Study</strong>: The Upper North Island Supply Chain Study has become less politically relevant as a result of COVID-19. The continuation of the process will be up to the next government.</li>
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<div><strong>Andy Bowley</strong></div>
<div><a href="mailto:andy.bowley@forsythbarr.co.nz" target="_blank" rel="noopener">andy.bowley@forsythbarr.co.nz</a></div>
<div>+64 4 495 8246</div>
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<div><strong>Scott Anderson</strong></div>
<div><a href="mailto:scott.anderson@forsythbarr.co.nz" target="_blank" rel="noopener">scott.anderson@forsythbarr.co.<wbr>nz</a></div>
<div>+64 4 914 2219</div>
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Port of Tauranga FY20 Preview&nbsp;— Keeping an Even Keel

UNDERPERFORM
We expect Port of Tauranga (POT) to release a subdued FY20 result when it reports on 28 August 2020, reflective of lower log export volumes and a slowdown in container growth. COVID-19 had an initial impact on POT by means of lower log export volumes, but the 'essential' nature of many of its trades has, and continues to, provide a reasonable level of immunity. We believe&nbsp;the bigger COVID-19 related issue for POT will be the resultant impact on the broader economic backdrop, which may influence cargo&nbsp;flows over the near to medium term.&nbsp;


Key things to look out for in&nbsp;POT's&nbsp;FY20 result:



Container growth softens: We estimate that POT's container volume was down -2% on FY19. Container volumes were up +4% in 1H20, however, we expect there has been a softening of volumes through the fourth quarter, leading to an overall volume decline.&nbsp;
Reduced log exports: NZ Stats data suggests that&nbsp;POT's&nbsp;log exports were down -22% in FY20, as a result of; (1) weak log&nbsp;prices through the start of the financial year, (2) Chinese demand decline in February 2020 as ports closed, and (3) forestry being deemed 'non-essential' during Alert Level 4.&nbsp;
Bulk trades: Lower oil products as a result of COVID-19 will weigh on 2H20 bulk products and exacerbate the weakness in both fertilizer and grain/dairy feed imports in 1H20.&nbsp;
Associates: We expect a meaningful increase in&nbsp;associate&nbsp;income, despite a subdued period for&nbsp;Northport&nbsp;(Stats NZ data shows log export volumes down -10%). Coda's recovery is a key driver as it cycles losses in 2H19.&nbsp;
Upper North Island Supply Chain Study: The Upper North Island Supply Chain Study has become less politically relevant as a result of COVID-19. The continuation of the process will be up to the next government.




Andy Bowley
andy.bowley@forsythbarr.co.nz
+64 4 495 8246





Scott Anderson
scott.anderson@forsythbarr.co.nz
+64 4 914 2219



Port of Tauranga: FY20 Preview — Keeping an Even Keel